Developing countries are urbanizing at an unprecedented rate. By 2050, the global urban population is expected to more than double, with nearly 7 in 10 people living in cities. This rapid urbanization brings opportunities: greater access to jobs and essential services. On the downside: increased congestion and air pollution negatively impact health, particularly in low- and middle-income countries. In fast-urbanizing Cairo, Egypt, up to two million people, each year seek medical treatment for respiratory problems related to poor air quality, mainly attributed to polluting transport.
Alternative fuels vehicles boost growth and curb pollution
Many developing countries are turning to alternative fuel vehicles as they design transport systems to fit these growing urban environments. Cairo has responded to its air quality problem by working with the World Bank Group to implement a new bus rapid transit system (BRT) that swaps 100 of its diesel buses for electric models. These are expected to start running later this year.
A similar system opened in Dakar, Senegal, in 2024. This modern BRT system is the first in Africa to run entirely on electric buses. The system serves 320,000 daily passengers with faster, safer, more comfortable rides, enables access to 170,000 additional jobs, and ensures that 59 percent of Dakar’s jobs are reachable within an hour’s commute.
These technologies offer a dual benefit, driving economic development while addressing air pollution. When countries adopt technologies like battery electric vehicles or hydrogen fuel cell vehicles, they incur multiple economic and health benefits, including:
- Increase mobility options for citizens;
- Build industrial capacity to produce vehicles and components locally;
- Create high-skilled jobs and develop technical expertise;
- Build resilience to fluctuating fuel prices;
- Improve public health through better air quality.
The rise of electric mobility
Demand for vehicles powered by alternative fuels is growing. By 2023, approximately 40 million electric cars were on the world’s roads, representing a 35% increase from the previous year. While still only a fraction of the global vehicle fleet, this figure signals a significant shift in transportation trends.
While electric vehicle adoption remains concentrated in advanced economies, an increasing number of cities in low- and middle-income countries are integrating electric vehicles into their public transportation systems. In addition to Dakar and Cairo, the World Bank Group has supported Santiago, and Bogota to implement electric bus rapid transit in recent years, among other cities.
Beyond Batteries: The Hydrogen Alternative
Battery-powered vehicles are just one option for governments seeking cleaner transportation solutions. Fuel cell electric vehicles (FCEVs), powered by hydrogen, offer another promising alternative with unique advantages.
Like battery-electric vehicles, FCEVs produce zero tailpipe emissions. However, when powered by green hydrogen (produced using renewable energy sources), FCEVs can take things a step further and achieve true zero-emission status. FCEVs also offer several operational advantages:
- Extended range: FCEVs typically have a longer driving range than battery-powered vehicles, as hydrogen fuel cells have a higher energy density per unit of weight than batteries.
- Rapid refueling: FCEVs can be refueled in just 5-15 minutes, compared to the several hours often required to charge battery-powered vehicles.
- Weight efficiency: For heavy-duty vehicles, hydrogen storage tanks are significantly lighter than large battery packs, allowing for higher cargo payloads and reduced wear and tear.
- Operational continuity: FCEVs excel in logistics applications requiring long-distance travel with minimal downtime.
- Specialized applications: FCEVs perform particularly well in challenging conditions such as hilly terrain, very cold weather, or emergency situations affecting power supply.
Economic development through Green Hydrogen
Beyond transportation benefits, green hydrogen production can drive economic growth and boost job creation. In Chile, for example, the World Bank is helping the government mobilize financial resources to develop an emerging green hydrogen industry. This initiative, backed by a $150 million World Bank loan, is expected to generate $280 million in private investment and create approximately 50,000 jobs.
The Chile Green Hydrogen project aims to establish a new industry that drives exports while supporting local decarbonization efforts.
The current reality: Adoption challenges
Despite these advantages, hydrogen vehicles remain relatively rare. In 2024, the global stock of FCEVs was just 93,000 units—roughly one hydrogen vehicle for every 330 battery-powered electric vehicles.
This limited adoption primarily stems from economic viability. While battery-electric vehicles have become cost-effective in many markets, FCEVs currently face significantly higher prices, making them an impractical option for most cases. Fuel cell buses and heavy-duty vehicles cost nearly three times as much as their diesel-powered counterparts and 20-30% more than battery-powered alternatives.
The road ahead
The economic equation for hydrogen vehicles is expected to improve. As clean hydrogen technology advances, costs should decrease substantially. By 2030, fuel cell buses and heavy-duty vehicles could emerge as economically viable alternatives to conventional vehicles, particularly in densely populated urban areas where air quality concerns are most acute.
For cities planning more efficient and less polluting transportation systems, considering battery electric and hydrogen fuel cell technologies offers customized solutions for a more economically vibrant urban future. Countries will need to weigh local factors and their unique needs to forge their own path to less-polluting types of transport. The World Bank Group can help with our research, analytics, and mobility scoping tool that weighs benefits and costs. Initially applied to a small sample, this tool has benefited 30 countries and growing.
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